NBN Price Cuts: What You Need To Know

Wholesale prices on the National Broadband Network are being cut in a bid to encourage Australians to sign up for faster broadband plans. Whether that approach works will depend on internet service providers getting on board and offering cheaper packages. Here's what we know so far.

NBN Co has revealed it is working on new "confidential" pricing models with internet and phone providers in an attempt to improve the network's bang-for-buck. By the end of the year, a new wholesale access model is expected to be announced that has the potential to end the "tax on megabits". Here's what you need to know.

Most NBN customers are still signing up for slower plans, with just 16 per cent of current NBN users taking up the faster 50/20 or 100/40 options.

This week NBN Co announced that it was cutting the wholesale price of the 50/20 service to match what it charges for 25/5, which is currently the most popular speed choice.

The thinking is that this will lead providers to cut prices on 50/20 plans, making them more attractive to consumers and potentially driving many of them to switch up to the faster speed.

The pricing move comes amidst a rising tide of complaints over the NBN not delivering promised speeds, which has led both Telstra and Optus to offer refunds to customers who couldn't get the speeds they were paying for.

TPG has already reflected the wholesale pricing change on its plans, offering an unlimited download plan with 50/20 speeds for $69.99 a month. Previously it charged that much for the 25/5 option. It has also cut the price of its 100/40 plan by $10.

Whether that approach will be taken by the two biggest telcos, Optus and Telstra, remains to be seen. Both encourage customers to sign up for bundles, which makes comparing prices directly more difficult.

Providers currently pay $24 a month wholesale to NBN for a basic 12/1 service, but analysis by finder.com.au shows that customers will usually have to pay double that or more to get a service with a decent data allowance, even at that low speed.

The wholesale price reduction is a temporary measure ahead of bigger changes planned for 2018, which will see NBN services with guaranteed throughput introduced.

In late 2018, NBN is also planning to introduce a new entry-level speed option, aimed at customers who only want a landline-like phone service. Those plans will include only the basic slow 12/1 service, along with just enough capacity to provide a voice-over-internet service to replace current landline phones.

However, regional Australians who will be connected via the Sky Muster satellite won't be offered that option.

With a wholesale price of $22, it's likely that customers on the new entry-level service will still be paying $30 or more a month. If all they want is a telephone service, a pay-as- you-go mobile plan is likely to be a better deal.

This article originally appeared in Digital Life, The Sydney Morning Herald's home for everything technology. Follow Digital Life on Facebook and Twitter.

Comments

Most NBN customers are still signing up for slower plans, with just 16 per cent of current NBN users taking up the faster 50/20 or 100/40 options.

This is based upon, of course, false statistics due to the fact most areas are inflicted with co-existance, meaning people can't GET faster speeds than 50/20, if they can get that *at all*. If we could actually get 100/40, I bet we'd see people signing up for faster speeds across the board...

The article or, more likely, NBN Co seems to be missing the forest for the trees. As you've pointed out, it's pointless to decrease costs on higher plans if the consumers are unable to achieve those speeds in the first place. To conflate the issue of Telstra, Optus and Tpg being forced to refund customers that are unable to achieve faster speeds with the high cost of cvc is weird.

Take Telstra for example, their lowest plan on their "standard evening speed" tier (which I think is 25Mbps, they don't offer the 12Mpbs tier) is $70 a month, and it only goes up from there. Optus starts at $60 a month on the 12Mbps tier and $80 for the 25Mbps tier. iiNet starts at $60 for the 12Mbps tier and $80 for the 50Mbps tier (they don't seem to offer the 25Mpbs tier).

Long story short, NBN plans, especially the higher speed tiers, are too expensive, and are a major contributing factor to many people signing up to the slower plans instead.

For us, in north east Melbourne, the 25mbit plan was really a 800kbit plan in the evening (according to Telstra this was due to congestion that we never experienced before NBN, or in layman’s terms, them overselling) so they gave us a free upgrade to the 50 mbit plan that saw us pushing 4mbit.

Honestly I think the best thing they can do to speed up adoption isn’t lower price, it’s make it less shit. It’s the only internet upgrade I’ve done in my life that’s slower and more prone to drop out than the thing that came before it.

It took us 4 months until we were getting decent speeds and not having to restart the modem 2/3 times a night- our 50mbit plan can now achieve as high as 38!

I don’t care if everybody signs up to the 25mbit plan if they can actually achieve that.

I'm personally on a 50/20 plan, I guess Internode are one of the few that offer that one. Didn't realise it was so rare, although all of the big players (Telstra, Optus TPG, iiNet etc) all have 50/20 plans, although they may be worded something like "Standard Plus", "Fast" or "Turbo", because of reasons.

I really wish it didnt lead to cheaper plans but instead RSPs using the savings for more CVC/backhaul. 2 months of sub megabit speeds with iinet (on FTTP) in the evenings had me ready to break things, so i changed RSP. This has to be one of the best bits of the NBN mess, if the RSP isnt supplying the service its super quick and easy to change to one that will.

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